Tech Incubator Eureka Has 'Aha' Moment With Channel

The significance of channel partnerships is working its way through in an accelerator program set to launch Sept. 1.

Canadian incubator Eureka Project has been helping tech startups network, gain access to capital and build their partner programs since 2007. It's teaching practical go-to-market strategies, but it's further clarifying its approach to helping fledgling companies with the rollout of the Catchfire Technology Accelerator next month.

"What we found was that in our part of the world it's really difficult for our clients to secure financing unless they have customers, and that even the angels or the traditional early investors where we live is a pretty conservative group so they really look for market traction. That's what drew us into the channel management piece of the business," Eureka Project CEO Gary Brownstone told CRN. "Over time, of course, we found that that part of our business was behaving more like an accelerator. So our egg is splitting in half."

In other words, Catchfire will pick up with companies where the Eureka Project ends.

Eureka, as an incubator, takes the seeds of an idea to a minimally viable product. Catchfire will serve as a second-stage act, taking that product and then building and managing the channels that win the company market acceptance and clients -- a key to winning additional funding from venture capital firms, private equity players and the like.

It also gives Catchfire the chance to nab an equity stake in a company -- something that doesn't happen with Eureka Project incubator companies -- as they prepare for venture capital or other investment.

Brownstone sees Catchfire having a place serving companies in the American Midwest along with the Canadian prairie.

"For us, we see three kinds of risk that scare off early stage investors: can an idea be done, management and market acceptance. The more we can mitigate those, the more we can bring private investment to those companies," Brownstone said.

There are a couple of common misconceptions that crop up among the startups Brownstone's worked with when it comes to channel management.

"First of all, people have never done it before and always think that's going to be the easiest part of the job, so until they've tried it and found out how difficult it is, they're not always believers," he said. "Other times, people recognize their own strengths. Our clients are often very strong on the tech side but have little or no business management experience and nothing remotely close to getting a product accepted by the market."

Canada-based game developer Complex Games co-founder Noah Decter-Jackson can vouch for the Eureka Project program.

Complex Games, which offers assistance on projects ranging from iPhone development to 3-D visuals, participated in the Eureka program between 2008 and 2010 and has steadily grown since graduating from the program, Decter-Jackson told CRN.

"Overall, the Eureka Project was crucial in the evolution of our business from an amateur enterprise to a growing and self-sustaining business," he said.

Eureka put Complex Games in touch with mentors and the professionals to help with back-end functions such as logistics, accounting and marketing.

Catchfire will go live with three companies: an IT health-care play, an IT education assessment tool and a food-processing technology.

"At the end of the day," Brownstone said, "we want to put you in front of VCs and hope we will have mitigated enough risk that we'll have some believers in the crowd."